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The Rebound Effect for Passenger Vehicles


  • Linn, Joshua

    () (Resources for the Future)


The United States and many other countries are dramatically tightening fuel economy standards for passenger vehicles. Higher fuel economy reduces per-mile driving costs and may increase miles traveled, known as the rebound effect. The magnitude of the elasticity of miles traveled to fuel economy is an important parameter in welfare analysis of fuel economy standards, but all previous estimates impose at least one of three behavioral assumptions: (a) fuel economy is uncorrelated with other vehicle attributes; (b) fuel economy is uncorrelated with attributes of other vehicles owned by the household; and (c) the effect of gasoline prices on vehicle miles traveled is inversely proportional to the effect of fuel economy. Relaxing these assumptions yields a large effect; a one percent fuel economy increase raises driving 0.2 to 0.4 percent.

Suggested Citation

  • Linn, Joshua, 2013. "The Rebound Effect for Passenger Vehicles," Discussion Papers dp-13-19-rev, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-13-19-rev

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    References listed on IDEAS

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    7. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
    8. Frondel, Manuel & Ritter, Nolan & Vance, Colin, 2012. "Heterogeneity in the rebound effect: Further evidence for Germany," Energy Economics, Elsevier, vol. 34(2), pages 461-467.
    9. Christopher R. Knittel & Ryan Sandler, 2013. "The Welfare Impact of Indirect Pigouvian Taxation: Evidence from Transportation," NBER Working Papers 18849, National Bureau of Economic Research, Inc.
    10. Mark R. Jacobsen, 2013. "Evaluating US Fuel Economy Standards in a Model with Producer and Household Heterogeneity," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 148-187, May.
    11. Greene, David L., 2012. "Rebound 2007: Analysis of U.S. light-duty vehicle travel statistics," Energy Policy, Elsevier, vol. 41(C), pages 14-28.
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    Cited by:

    1. De Borger, Bruno & Mulalic, Ismir & Rouwendal, Jan, 2016. "Substitution between cars within the household," Transportation Research Part A: Policy and Practice, Elsevier, vol. 85(C), pages 135-156.
    2. De Borger, Bruno & Mulalic, Ismir & Rouwendal, Jan, 2016. "Measuring the rebound effect with micro data: A first difference approach," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 1-17.
    3. Kenneth Gillingham & David Rapson & Gernot Wagner, 2016. "The Rebound Effect and Energy Efficiency Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 68-88.
    4. Stapleton, Lee & Sorrell, Steve & Schwanen, Tim, 2016. "Estimating direct rebound effects for personal automotive travel in Great Britain," Energy Economics, Elsevier, vol. 54(C), pages 313-325.
    5. repec:eee:eneeco:v:67:y:2017:i:c:p:111-120 is not listed on IDEAS
    6. Gioele Figus & Patrizio Lecca & Karen Turner & Peter McGregor, 2016. "Increased energy efficiency in Scottish households: trading-off economic benefits and energy rebound effects?," EcoMod2016 9454, EcoMod.
    7. Moshiri, Saeed & Aliyev, Kamil, 2017. "Rebound effect of efficiency improvement in passenger cars on gasoline consumption in Canada," Ecological Economics, Elsevier, vol. 131(C), pages 330-341.
    8. Gioele Figus & Patrizio Lecca & Peter McGregor & Karen Turner, 2017. "Energy efficiency as an instrument of regional development policy? Trading-off the benefits of an economic stimulus and energy rebound effects," Working Papers 1702, University of Strathclyde Business School, Department of Economics.
    9. Gillingham, Kenneth & Jenn, Alan & Azevedo, Inês M.L., 2015. "Heterogeneity in the response to gasoline prices: Evidence from Pennsylvania and implications for the rebound effect," Energy Economics, Elsevier, vol. 52(S1), pages 41-52.

    More about this item


    fuel economy standards; passenger vehicles; vehicle miles traveled; household driving demand;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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